Deal reached to avoid default, reopen government

WASHINGTON — The Senate has voted to avoid a financial default and reopen the government after a 16-day partial shutdown.

The vote was 81-18 Wednesday night. The measure now heads to the House, which is expected to back the bill before day’s end.

Senate passage came several hours after Majority Leader Harry Reid and Minority Leader Mitch McConnell announced the bipartisan compromise.

The bill would reopen the government through Jan. 15 and permit the Treasury to borrow normally through Feb. 7 or perhaps a month longer.

Congress faced a deadline of 11:59 p.m. on Thursday. That’s when Treasury Secretary Jacob Lew had said the government would reach the current $16.7 trillion debt limit and could no longer borrow to meet its obligations.

A frantic day of legislative maneuvering ended in futility for Speaker John A. Boehner today, as the most conservative members of the House refused to back his proposed compromise to end the standoff over the federal budget.

The failure leaves a bipartisan Senate plan negotiated by Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., as the sole way out of a stalemate that risks a U.S. default on its bills and huge economic disruptions.

A bill that passed the Senate would receive Democratic support in the House, guaranteeing a majority, if Boehner were willing to bring it to the floor even without the backing of a majority of Republicans. He is widely expected to do so, however, having run out of time for other options.

Earlier in the day, Boehner reiterated that he opposed allowing the government to risk default.

“I have made clear for months and months that the idea of default is wrong, and we shouldn’t get anywhere close to it,” he said.

Shortly after House leaders officially called off a vote on their most recent plan, spokesmen for both Reid and McConnell said Senate talks were resuming. They had paused for the day to allow Boehner, R-Ohio, a chance to get a bill through the House.

The two leaders are “very close,” a top Senate aide said.

Senate aides said the agreement would extend the Treasury’s authority to borrow money through Feb. 7 and end the government shutdown, providing federal agencies with funds through Jan. 15. In the meantime, congressional negotiators would try to work out a longer-term budget solution.

The plan would make no significant changes in President Barack Obama’s health care law. Democrats were expected to drop a proposal to repeal a new tax on insurance plans that is opposed by some unions. The agreement also would direct officials to confirm that people receiving insurance subsidies under the law were eligible for them — something Democrats say the law already requires.

Earlier in the day, Fitch Ratings put the government’s AAA credit rating on watch for a potential downgrade because of the standoff. The company said that it believed the federal debt limit would be raised soon but that “political brinkmanship” was risking a default.

Treasury officials have said they cannot guarantee having enough money to pay all the government’s bills after Thursday. If the debt limit is not lifted, “the Treasury would still have limited capacity to make payments,” Fitch said, but “it would be exposed to volatile revenue and expenditure flows.”

“The U.S. risks being forced to incur widespread delays of payments to suppliers and employees, as well as Social Security payments to citizens — all of which would damage the perception of U.S. sovereign creditworthiness and the economy,” the agency added.

Whether Congress can pass a bill quickly will depend on whether tea party conservatives led by Sen. Ted Cruz, R-Texas, mount a filibuster in the Senate to slow the process.

Reid and White House officials sharply criticized Boehner’s tactics during the course of the day. But despite the rhetoric, Boehner already had accepted much of the framework of the Senate deal. Behind the scenes, McConnell and Boehner worked to coordinate procedural steps that could allow a House-passed bill to be rapidly amended and moved through the Senate.

Senators had indicated, however, that they would wait only a day to see if the House could muster a majority.

When the House effort collapsed, White House Deputy Chief of Staff Rob Nabors said he wasn’t surprised. “We were never really sure what they were up to,” he said.

In a WABC-TV interview earlier in the day, Obama said White House officials had seen in the past that Boehner “can’t control his caucus.”

With nearly all House Democrats united in opposition to Boehner’s proposal, he could afford to lose only about 15 Republicans. The speaker and his leadership team struggled to come up with a plan that could win conservative support. Throughout the day, members walked in and out of leadership offices, discussing options.

“There are a lot of opinions about what direction to go,” Boehner said early in the day. “There have been no decisions about what exactly we will do.”

Even though waiting for Boehner cost 24 hours, some Senate Republicans portrayed the decision as a necessary effort to protect his influence and to prevent the House from being fully dominated by its most ardent conservatives. Many Republican senators blame the conservatives in both chambers for launching the party on a failed budget strategy.

In the end, however, the day’s maneuvers reinforced the sense that outside conservative groups now rival Boehner for influence in the House.

The speaker and his lieutenants had negotiated a plan with House members and scheduled a key procedural vote for early evening. Shortly before that could take place, Heritage Action, an influential conservative advocacy group, announced it would oppose the plan because it would not significantly roll back Obamacare.

Within an hour, Boehner was forced to abandon the vote. Aides to the House leadership insisted, however, that the proposal was failing even before Heritage weighed in.

Republicans already had given up almost all of their demands for changes in Obama’s health care law or other shifts in government policy. With the shutdown in its third week, the GOP has suffered badly in public opinion polls, and many lawmakers are ready to call a halt to a fight that began with conservatives seeking to use the leverage of a budget crisis to force Obama to make concessions.

“I can understand fighting for your cause, but there comes a point when you have an obligation to the country as a whole,” said Sen. Lindsey Graham, R-S.C.

“The best thing for the country is for John Boehner to be able to deliver,” he said. “I just hope our colleagues in the House who believe it’s better to have more Republicans, not less, a governing majority, rather than a dysfunctional majority, will help John when he needs their help.”

In hopes of attracting conservative votes, Boehner included a provision ending the government’s payment of its traditional employer’s share of health insurance premiums for members of Congress and administration officials. Democrats have previously rejected that idea, which is popular among Republican activists.

He also initially included a measure to repeal a tax on medical-device manufacturers that is unpopular with many lawmakers in both parties.

By midday, Republican leaders dropped the medical-device tax repeal, to which some conservatives objected. And they bolstered the provision to cut off government payments for insurance plans, making it also apply to staff working for members of Congress. The proposal amounts to a pay cut of thousands of dollars for those affected.

Editor’s note: This story first appeared in the Toledo Blade.

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